CPUC and PG&E Emails: "You and I can triangulate"

8/21/2019 CPUC and PG&E Emails: "You and I can triangulate"

1/53

From: Clanon, Paul

Sent: 1/10/2011 5:59:46 PM

To:

Cherry, Brian

K (/0=PG&E/0U=C0RP0RATE/CN=RECIPIENTS/CN=BKC7)

Cc: Johnson,

Kirk

(/0=PG&E/0U=C0RP0RATE/CN=RECIPIENTS/CN=MKJ2)

Bee:

Subject: Re:

CPUC

Newsclips for Monday,

January 10

Here's what I

get

from

my

people. You agree?

Follows:

PG E raises

the pressure in transmission lines to MAOP once every five years based

on its conservative interpretation of 192.917(e)(4). That code section is not clear on

whether the maximum pressure experienced in the preceding five years

means

the

preceding

five

years prior

to designating

the pipeline as HCA fixed)

or

just

the

preceding

five

years

(moving). PG E uses

the

moving

five-year

interpretation. As of

today,

PHMSA

has not given a

clear

interpretation

on this.

Many utilities

in

the

country

use

the moving

five-year

interpretation to be on the safe side.

On

Jan 10, 2011, at 5:19 PM,

Cherry,

Brian K

wrote:

No, I

still think that is

true

- at least that is what

I heard

before.

I

think the subtlety

that

we weren't

told by

our

operating people

is

that it isn't

required -

it is industry practice.

Therefore, if operators

want

to maintain MAOP at those levels, they have the right to

run

them

at

those

pressures to maintain

the rating

-

but

aren't

required

to do so by law

if

they

are ok with a lower rating. Kirk - is

that

right ?

From: Clanon, Paul

[mailto:[email protected]]

Sent: Monday,

January

10, 2011 5:15

PM

To: Cherry, Brian

K

Subject:

Re: CPUC Newsclips for

Monday, January

10

So it

isn't true that

operators

have to operate a line

at MAO P

every

five

years

or

the

MAOP

ratchets down

to

the

highest pressure experienced during

that

time?

I

think

I've heard

that from both

your

guys

and

mine.

On Jan 10, 2011, at 5:05

PM,

Cherry, Brian K wrote:

SB

GT S 025

mailto:[email protected]:[email protected]


2/53

From: Clanon, Paul

Sent: 1/10/2011 10:48:13 AM

Cherry, Brian K (/0=PG&E/0U=C0RP0RATE/CN=RECIPIENTS/CN=BKC7)To:

Cc:

Bee:

Subject: Re: CPUC Newsclips for Monday, January 10

Thx. Our guys are doing the same thing, and you and I can triangulate.

From: Cherry, Brian K [mailto:[email protected]]

Sent: Monday, January 10, 2011 10:40 AM

To: Clanon, Paul; Clanon, Paul

Subject: Fw: CPUC Newsclips for Monday, January 10

Will get you the answers.

From: Loduca, Janet C.

Sent: Monday, January 10, 2011 10:38 AMTo: Cherry, Brian K

Cc: Garber, Stephen (Law)

Subject: RE: CPUC Newsclips for Monday, January 10

Brian

- the team is working on some follow-up Q&A,

From: Cherry, Brian K


To: '[email protected]'; Loduca, Janet C.; Pruett, Greg S.

Cc: Bottorff, Thomas E


Not sure. Let me follow up, I was under the same understanding, Jane or Greg - can you help

?

From: Clanon, Paul [mailto:[email protected]] Sent: Monday, January 10, 2011 10:03 AM

To:

Cherry,

Brian

KSubject: FW: CPUC Newsclips for Monday, January 10

What

are your guys saying about the facts in the Chron story

yesterday? Contradicted my understanding of the rules, anyway.

SB GT&S 001

mailto:[email protected]:[email protected]:[email protected]:[email protected]


3/53

From: Clanon, Paul

Sent: Monday, January 10, 2011 9:35 AMTo:

Clark, Richard W.; Halligan, Julie; Stepanian, Raffy; Lindh, Frank; Fitch, Julie A.; Berdge, Patricks.; Lewis, Kenneth E.


The

Chronicle's

story

on

the

2008

temporary

rise

in

pressure

on

Line

132

to

400

psi

doesn't match what i've heard. What are the facts? Is it standard practice or not to raise pressure up to

MAOP to preserve the maximum? Is 2008 really the only time PG&E has raised pressure on

that line above 375 until the explosion?

On

Jan

10, 2011, at 9:01 AM, "Hall, Thomas A." wrote:

Good morning. We have clips on the PUC’s work to ensure pipeline safety, high-speed rail and more.

CPUC NEWSCLIPS

For

Monday, January 10, 2011

For newsclips help, contact Tom Hall (tbh) at 916-928-2274

Newsclips also available on Intranet in .doc format

To follow a link, hold CTRL, then click with left mouse button

To return to the top, hold CTRL, then press the “Home” key or click a Back to Table of

Contents

link

TABLE OF

CONTENTS

ENERGY - California

SJ Mercury News - Establishing safe pressures for PG&E gas lines could

prove huge, costly task

U :ords

’ugly,’

California

says

SF Chronicl

CGsT

urge may have stressed San Bruno line in '08

Tahoe Daily Tribune Power through the storm?

Santa Rosa Press Democrat - PG&E, state PUC should heed plea from

U.S. regulal DITORIAU

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From: Cherry, Brian K

Sent: 1/10/2011 5:00:39 PM

To: 'Clanon, Paul' ( [email protected])

Cc:

Bcc:


We live in parallel universes....

From:

Clanon,

Paul [mailto:[email protected] ]

Sent: Monday, January 10, 2011 5:00 PM To: Cherry, Brian K

Subject: Re:

CPUC Newsclips for Monday, January 10

My guys are having trouble with this one too for some reason.

On Jan 10, 2011, at 4:53 PM, "Cherry, Brian K" wrote:

Nothing yet. Soon I hope. I heard the response they received from Law was unintelligible.

From: Clanon, Paul [mailto:[email protected] ]

Sent: Monday, January 10, 2011 4:53 PM To: Cherry, Brian K

Subject: Re:

CPUC Newsclips for Monday, January 10

Nothing back on this yet?

On Jan 10, 2011, at 10:39 AM, "Cherry, Brian K" wrote:

Will

get

you

the

answers.

From:

Loduca, Janet C.

Sent: Monday, January 10, 2011 10:38 AMTo: Cherry,

Brian KCc: Garber, Stephen (Law)Subject: RE: CPUC Newsclips for Monday, January 10

Brian - the team is working on some follow-up Q&A.

SB GT&S 001

mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]


5/53

From:

Cherry,

Brian

K


To: '[email protected]': Loduca, Janet C.; Pruett, Greg S.

Cc:

Bottorff,

Thomas

E


Not sure. Let me follow up. I was under the same understanding,

Jane or Greg - can you help ?

From:

Cianon, Paul [mailto:[email protected]]

Sent: Monday, January 10, 2011 10:03 AM To: Cherry, Brian KSubject: FW: CPUC Newsclips for Monday, January 10

What are your guys s out the facts in the

Chron

story

yesterday?

Contradicted

my understanding of the rules, anyway.

From: Cianon, Paul

Sent: Monday, January 10, 2011 9:35 AMTo: Clark, Richard W.; Halligan, Julie; Stepanian, Raffy; Lindh, Frank;

Fitch, Julie A.; Berdge, Patrick S.; Lewis, Kenneth E.


The Chronicle's story on the 2008 temporary rise in pressure on

Line

132

to

400

psi

doesn't match

what

i've

heard.

What

are

the facts?

Is it standard practice

or not to raise pressure up to MAOP to preserve the maximum? Is 2008 really the only time PG&E has raised pressure on

that line above 375 until the explosion?

On Jan 10, 2011, at 9:01 AM, "Hall, Thomas A." wrote:

Good morning. We have

dips

on the PUC’s work to

ensure

pipeline

safety,

high-speed

rail

and

more.

CPUC NEWSCLIPS

For Monday, January 10, 2011

For newsclips help, contact Tom Hail (tbh) at 916-9282274

SB GT&S 001

mailto:[email protected]:[email protected]:[email protected]:[email protected]


6/53

Newsclips also available on Intranet in .doc format

To follow a link, hold CTRL, then click with left mouse button

To

return

to

the

top,

hold

CTRL,

then

press

the

“Home” key or click a Back to Table of Contents link

TABLE OF CONTENTS

ENERGY - California

SJ Mercury News - Establishing safe pressures for PG&E

gas lines could prove

huge,

costly

task

UPI ■ PG&E records ’ugly,’ California says

SF Chronicle - PG&E surge may have stressedSan

Bruno l ine in ’08

Tahoe Daily Tribune Power through the

storm?

Santa Rosa Press Democrat - PG&E, state

PUC should heed plea from U.S. regulators

(EDITORIAL)

Marin Independent Journal - PG&E should

give customers a choice on SmartMeters(EDITORIAL)

TELECOM - California

LA Wh.-*t’v tu hiatus for Alls')outages? (COLUMN)

TRANSPORTATION

-

California

San Mateo Daily Journal - High-speed railhead ditches Caltrain

Fresno Bee - Path of high-speed rail worriesValley farmers

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LA Time' F *po Line bidders under new scrutiny in fraud and construction problems

WATER -

California

Monterey

Hera

ttle

brews

over

water

fee

Fresno Bee - Dams release excess water asrain fills Valley reservoirs

ENERGY -

National

Treehugger - A Black Market for 100-WattBulbs?

U.S. Ban Looms

TELECOM - National

Connected

Planet

-

Broadband

payback

not just

about subscriber revenues

Politics/General/Miscellaneous

Bakersfield Californian - Brown should give

Dean Florez

seat

on PUC (EDITORIAL)

Oakland Tribune - Nation's first transgender

trial judge overcame discrimination

SF

Chronicle

-

Brown

gets

hearing

on

sale

of buildings postponed

LA Times - Gov. Jerry Brown wants to tamebudget with tax extensions, deep cuts

LA Times - Selling stat» ts would be folly(COLUMN)

ENERGY - California

SJ Mercury News - Establishing safe pressures

for PG&E gas lines could prove huge, costly task

By Steve Johnson and Pete Carey, Jan 9

As

state

regulators start

the process of making PG&E

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verify that the pressure limits for its natural gas pipelines are safe, they have been dismayed by the disorganized state

of the utility's records, complicating a project that is now predicted to take years, cost millions and inconvenience customers along the way.

Based

on

what

the

California

Public

Utilities

Commission

has determined

so far,

it appears at least 450 miles - or one fourth - of the 1,800 miles of gas transmission

pipes that PG&E operates in urban areas

may need

to undergo pressure tests - typically

done with liquid or gas - to establish the safe level. That's because the company may not have paperwork justifying

the limits it has set for those pipes.

Just locating all the records that describe the condition of PG&E's vast pipeline network could prove onerous, commission officials

told

the Mercury News last week. They

said the documents appear to be scattered hither

and

yon,

with

some

in

dusty

file

cabinets,

remote

field

offices

and

other

places

the

company

isn't even

sure

about. Even if all the records can be found, it's unclear

how much stock can be put in their accuracy, given the recent revelation that PG&E's paperwork mischaracterized the portion of San Bruno pipe that exploded Sept. 9, killing eight people and destroying 38 homes.

"We've been putting them under the microscope, and when you do that, you find things that are ugly,” said Julie Halligan, deputy director of the utility commission's consumer protection and safety division.

"That

doesn't

increase

your

confidence.”

After a recommendation from the National Transportation Safety Board, the CPUC last week ordered PG&E to identify all manufacturing, maintenance and other documents for its gas pipes so the utility can determine the lines' maximum allowable operating

pressure, based on each pipe's weakest part. If the utility can't do that, the CPUC board recommended, the

utility should

conduct pressure tests to establish the safe level - a procedure that involves

shutting off the gas to customers.

What

the

CPUC

didn't

reveal -

until

the

interview

with

the

Mercury

News

-

is just how

involved

it expects

the

task of finding records and testing pipes to be.

Although the cause of the San Bruno blast is still under investigation, the NTSB issued a rare "urgent" advisory last week, in part after discovering the pressure in the San Bruno transmission pipe spiked right before the blast but never reached its maximum allowable operating

pressure. The pipe had been pressure tested

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at that

maximum level two years before the explosion.

In addition, although PG&E's records described the burst pipe section as seamless, the federal agency found that the segment actually had been welded along its length, making it potentially more susceptible

to

rupture.

PG&E officials declined to comment to the Mercury News late last week about the CPUC's latest concerns. But the company wrote the CPUC on Friday that it hoped to deliver the records the agency is seeking by March 15, adding, "This is a substantial undertaking."

Paul Clanon, the commission's executive director, agreed. "The records search we ordered PG&E to undertake is unprecedented,"

he said. "The pure

logistics of getting to all those records is daunting."

Many

of the

more

than

6,000

miles

of

PG&E's

gas

transmission lines were installed decades ago when

the utility wasn't required to keep extensive paperwork on the pipe's method of construction, inspection history and other factors. Consequently, in some cases PG&E has only limited or incomplete records, Halligan said, and in other instances, "they have no records whatsoever."

State officials hope to find multiple documents that provide matching descriptions about each pipe segment, giving them some assurance the records accurately reflect what is underground.

But in cases where the records are contradictory, fuzzy or nonexistent,

line segments will have to be pressure tested, they said. Although that process will shut off gas to customers in the affected area, the utility could deliver gas via trucks or alternate distribution lines to areas where pipes are being tested. How all that might work, and how many customers will be affected, has yet to be determined. PG&E has 2.9 million natural gas customers in the Bay Area.

"It potentially could be really big in terms of the disruption" for the public, said Frank Lindh, legal

counsel

to

the

CPUC.

Gas pressure already has been reduced by 20 percent in five Bay Area transmission lines because of concerns that the ruptured San Bruno segment may not be the only weak spot in PG&E's pipe network. Depending

on what other problems may surface from PG&E's record search, the utilities commission may have to reduce the pressure in additional lines, which

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could result in other customers not getting as much gas as they need.

Similarly

unknown is the price tag for all this work.

Lindh estimated the pressure testing alone might cost

"multiple

tens

of

millions"

of

dollars.

And

if the

pressure tests reveal weaknesses that require pipe segments to

be replaced, the bill could increase much more. State officials said it typically costs $6 million to replace one mile of transmission pipe. Who will pick up the bill is yet to be decided.

None of this will happen overnight.

"It's going to take years," Clanon said, though he stressed

that "doesn't mean the system is unsafe in the meantime.

We're

taking

the

steps

to insure the safety of the system by reducing pressure and taking

other

steps."

He added that his agency is committed to improving PG&E's pipeline operations.

"It will get done," Clanon said. "The sense of urgency we feel at the CPUC is huge. People died at San Bruno."

Back to Table of Contents

UPI - PG&E records 'ugly,' California says

By Staff . Jan 10

SACRAMENTO - Records related to natural gas transmission

pipelines in California

operated by Pacific Gas and Electric Co, are "ugly,” a state utility director said.

The California Public Utilities Commission ordered PG&E

to find documents related to its California gas

transmission

network so it can examine the operating

pressure in

the pipes to find weak spots.

The

company,

the

San

Jose

Mercury

News

reports,

might not have all of the paperwork. The CPUC, meanwhile, notes that about 25 percent of the companies 1,800 miles of pipeline might need pressure testing.

"We've been putting them under the microscope, and when you do that, you find

things

that are ugly," said

Julie Halligan, a deputy director of consumer protection

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and safety division at CPUC. "That doesn't increase your confidence."

Most of the gas transmission lines were installed before extensive record-keeping was required, the newspaper

report

adds. Hailigan said in some

circumstances

there

are

no

records

about

California's

natural

gas

pipelines.

A natural gas pipeline owned by PG&E burst Sept. 9, sparking a massive fireball that ripped through a San Bruno neighborhood. The explosion killed eight people and

destroyed 37 homes.

The National Transportation Safety Board said it found

weld issues along the San Bruno pipeline that may have led to the rupture.


SF Chronicle - PG&E surge may have stressed

San Bruno line in '08

By Jaxon Van Derbeken, Jan 9

Pacific Gas and Electric Co. briefly raised the pressure on its San Bruno natural gas line to the brink less than two years before the explosion that killed eight people - an action experts call a "huge gamble" that they fear made the pipe more susceptible to failure.

A

Chronicle

investigation

into

events

before

the explosion

led PG&E officials to reveal that for two hours on Dec. 9, 2008, the company intentionally boosted gas pressure to the maximum legal limit of 400

pounds per square inch. That was more pressure than PG&E has ever acknowledged using on the line, which it normally ran at 375 pounds per square inch.

The utility initially explained that it had boosted the

pressure because federal regulations required it to do so, but later conceded

that its interpretation was inaccurate. It then explained that the spike was "part of our

operating practice."

This is

the first time the company has ever

acknowledged running the San Bruno line at its legal

maximum - a level now under scrutiny by federal investigators in light of revelations that PG&E had erroneous records about the pipeline's characteristics.

The next time the pressure exceeded 375 pounds per square inch on the line was on Sept. 9, when a

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malfunction caused a

surge to 386 pounds - a spike

that coincided with the deadly explosion and fireball in

San Bruno

that destroyed 38 homes.

Early strain in line

PG&E's

intentional

surge

in

2008

could

have

strained the San Bruno line and made it more vulnerable to

failure at lower pressure levels, according to experts interviewed by The Chronicle. Strain caused by one surge, they said, can weaken a pipe to the point where it can fail at a lower point when pressure surges again.

"If there was a defect very close to failure, it could cause that defect to enlarge," said Robert Eiber, a nationally recognized pipeline expert. "I'm frankly amazed they were willing

to take

the risk. I don't know

if they were aware of the risk they were taking or not. But in a case like this, it was a huge gamble."

When queried by The Chronicle, PG&E initially said federal regulators require

that

a pipe be run at full strength at least once every five years in order for the utility to "preserve" its legal capacity.

If the pressure ever exceeds that limit, the utility is obligated to

conduct a costly, high-priority inspection of the line.

Had PG&E not spiked the pressure on the 30-inch transmission

line running from Milpitas to San Francisco, utility spokesman Denny Boyles first said,

the

pipe's

capacity

would

have

been

permanently

reduced to 375 pounds per square inch under federallaw.

Changing stories

But the spokesman later backtracked when asked to cite the specific federal regulation, saying PG&E's earlier

response was "too general and as a result inaccurate.” He maintained that PG&E still believed that 400 pounds per square inch was a "very safe level" for the San Bruno line.

In

a

subsequent

statement,

the

company

no

longer

said

federal law had prompted its action.

"Putting the pressure up to 400 was part of our operating

practice," Paul Moreno, a PG&E spokesman, said Friday. He said the utility operates its lines at their maximum once every five years. He declined to elaborate.

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The U.S. Pipeline and Hazardous Materials Safety Administration said in a statement that the agency "does

not require a pipeline

operator to do anything" to preserve the legal pressure capacity of gas transmission

lines.

When

asked

about

the

surge, a spokeswoman

for

the

California

Public

Utilities

Commission,

which

regulates PG&E, said only that "we do not have rules about spiking artificially."

The National Transportation Safety Board's investigation

into the cause of the San Bruno blast is looking at any previous incidents of pressure surges. "That's

going to be part of our investigation, and we will be looking at the pipeline's

operating history," said

Peter

Knudson, a safety board spokesman.

Experts shocked

Although the San Bruno line did not fail during the 2008 pressure

spike, experts interviewed by The Chronicle said the utility had been taking a terrible chance.

Richard

Kuprewicz, a pipeline safety consultant in

Redmond, Wash., said that in spiking the pressure, PG&E's action

created the likelihood

that "stable operations may

be stressed and

become unstable.”

"You just don't go out there and do real-time pressure tests

of this magnitude on lines without doing careful

thought

and

evaluation,"

Kuprewicz

said.

"This

is

a

gas

transmission pipeline. This is in the middle of a city.

You

don't just go raise the pressure on pipelines and hope they stay together."

Eiber, a pipeline integrity consultant and researcher in Columbus,

Ohio, with 50 years of experience in the business, said

the

natural gas industry all but

abandoned

artificial

spikes after a 1960 incident in

New Mexico in

which a pipe split along its seam for 8 miles during such a

test. No one was hurt.

The September disaster in San Bruno, Eiber said, "demonstrated

what

could

have

happened

in

their spike

test. It's not a good practice.”

Boyles, the PG&E spokesman, declined to respond to the

criticisms, citing the federal investigation into what

caused the explosion.

Records problems

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The intentional pressure

spike was also

problematic because questions have

emerged since the explosion about

whether PG&E knew the real strength of the San Bruno line when it set the maximum gas pressure at 400 pounds per square inch in

1970.

The

utility

has

conceded

that

its

records

erroneously

showed

that the

San

Bruno

section

of the

pipeline, installed in 1956, had no seams. In fact, federal investigators found, the ruptured portion of the line not only had seams, but was pieced together in several 4- foot-long

sections that were constructed to unknown, potentially

inferior, specifications.

The National Transportation Safety Board says its investigators

are examining the quality of seam welds that held the pipeline together - welds that PG&E did not

know

existed when it

set the pipeline's maximum pressure. The

federal agency has not reached a

conclusion

about

what

caused

the

explosion.

The board said last week that "it is critical to know all the

characteristics of a pipeline in order to establish a valid MAOP (maximum allowable operating pressure) below which the pipeline

can be safely operated. The NTSB is concerned that these inaccurate records may lead to incorrect" maximum pressure levels.

James Hall, a former chairman of the safety board and now an independent pipeline safety advocate, said PG&E's

erroneous records about the line could have

led the utility to set the maximum pressure level too

high.

"If you don't have the records on the pipe, how are you setting the pressure?" Hall said.

Inspection issues

In fact, federal pipeline officials say, the intentional 2008

surge

might have had some bearing on the

validity of PG&E's subsequent inspection of the line in November 2009,

which found no problems in the pipe.

The

only pressure

figure the government considers

relevant,

according

to

the

federal

pipeline

safety

agency, is the highest level at which the line was run

from

about 1997 to 2002, when Congress passed a law requiring

regular inspections of pipelines in urban or"high consequence" areas.

That peak becomes a benchmark that could, if

exceeded, activate a new inspection.

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PG&E officials said Friday

that the utility did not run the line above 375 pounds per square inch from 2000 to 2002,

but

that older

records were unavailable.

PG&E has said it kept the San Bruno line's pressure at 375 pounds per square inch because it was connected

to

three

other, weaker

lines

with that

capacity.

PG&E

pinched

off those

lines

for the

2008 surge,

the

utility said.

Putting stress on welds

Any surge above the benchmark level - intentional or otherwise

- is exactly the type of incident that, under the 2002 law, should have

forced PG&E to conduct a high-priority inspection using a technique that could detect weakness in a pipe's welds, federal

officials said.

That's

because

pressure

surges

can

put

stress

on

a

line's welds, meaning the line is no longer considered "stable," the federal pipeline safety agency said.

PG&E went forward with the November 2009 inspection using a method suitable mainly for detecting pipe corrosion, not weakness in welds.

That method, called direct assessment, involves

researching records on a pipeline, electronically mapping it using ski-pole-like devices, and digging spot- check

holes

to

examine

the

pipe.

The

method

considered

more

reliable

for

finding

weak

welds involves

shutting down a pipe,

pumping high- pressure water into it, and then repairing any damage that

materializes.

PG&E has avoided using it on most of its gas transmission pipes, citing the inconvenience to customers and cost of shutting down lines.

Nevertheless,

PG&E's intentional

spike of the line's

pressure might have prevented it from using direct

assessment in its 2009 inspection, federal officials indicated.

"Direct

assessment

is not

considered

a

viable

assessment

method

when

manufacturing

and

construction defects are 'unstable,' and

therefore would not be permitted under federal regulations," the pipeline safety agency said.

PG&E did not respond to queries about the legality of the

2009 inspection. The

utility has consistently

defended

direct assessment tests

as being reliable.

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'Reckless

enterprise'

Hall, the former National Transportation Safety Board chairman, called the 2008 spike "a reckless enterprise" that was "obviously an exercise for their financial situation, not safety."

"You are dealing with pipe that has been in the ground more than 50 years, it has never had an internal inspection tool in it, has incomplete records, and they now artificially spike the line?” Hall said. "Why would you take such a high-risk action in a high-consequence area?"

Every spike above normal operating pressure presents a risk of disaster in such an old pipeline, Hall said.

"You can roll the dice many times," he said, "before you come up with snake eyes."


Tahoe

Daily Tribune - Power through the

storm?

Outages raise concerns as a new company takes over

By Adam Jensen. Jan 10

SOUTH LAKE TAHEO, Calif. — Concerns about how a new, smaller electric company will be able to

respond

to

widespread

power

outages

persist

following

a change in energy providers in the Lake Tahoe Basin.

Liberty

Energy — California Pacific Electric Company completed its purchase of Sierra Pacific Power Company's electrical distribution and generation assets Jan. 1.

The power company was previously referred to as CalPeco

in California Public Utilities Commission documents. Sierra Pacific Power Company is a subsidiary

of NV Energy and included the Nevada corporation's California operations.

Two South Lake Tahoe City Council members, Tom Davis and Bruce Grego, said they are concerned with how

the new company will be able to respond to power outages like those experienced last week.

NV Energy serves about 1.2 million customers in Nevada, while Liberty Energy's coverage includes 46,000

customers in Nevada, Placer, Sierra, Plumas,

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Mono,

Alpine

and El Dorado counties.

“They're a small company; do they have the resources to deal with a power outage?” Davis asked Thursday.

Wet, heavy snow knocked

out

power to almost 10,000

customers

at

the

South

Shore

Dec.

29.

Although

most customers' electricity was restored Dec. 30, some

were without power for more than 48 hours.

Several NV Energy crews from Reno and the Carson Valley were used to help restore power at the lake.

Bob

Dodds, president and general manager of Liberty

Energy, said the new company will have two crews at the North Shore and two crews at the South Shore, just like Sierra Pacific did.

He also said the new power company will also be able

to

use

resources

from

NV

Energy

when

necessary.

“We have agreements with NV Energy that we can pull in crews

as we need,” Dodds said.

The agreements are formal, but are not available for public

review because they are proprietary, Dodds said.

Dodds

said the goal is to make the transition between

Sierra Pacific and Liberty Energy as seamless as

possible.

The South Lake Tahoe City Council approved transfer of the city's franchise agreement from Sierra Pacific to Liberty

Energy in October. The 25-year agreement ends

in 2018.

Councilman Bruce Grego was the lone dissenting vote against the transfer. He asked for a delay so the transfer could receive further scrutiny. On Thursday, he

said

the City

Council should have been more

critical of transferring the franchise agreement, possibly placing conditions on the new company to ensure service

standards.

At the time, then-Councilman Bill Crawford said it

would be “frivolous” to delay a vote on the item because the council cannot prevent NV Energy from selling

its property.

The lack of a vested interest in the area covered by Liberty Energy by NV Energy could delay help to the South

Shore in the case of widespread power outages,

SB GT&S 001


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Davis said. Using another company's resources could

also pass along? costs to consumers, Davis added.

Customers' monthly bills should remain at the same level, but will be itemized differently because of the switch,

Dodds said. He said a rate increase in 2012

should

be

similar

to

what

Sierra

Pacific

would

have

proposed.

NV Energy spokeswoman Faye Anderson did not return a request for comment Thursday.

Davis called the potential for long-lasting, widespread

power outages in winter “very disturbing,” especially for seniors

or others who have trouble leaving a residence in an emergency.

Both Davis and Grego said they've asked City Manager Tony O'Rourke to discuss emergency

response

preparations

at

an

upcoming

council

meeting, especially when it comes

to keeping the lights on in the city.

Neither councilman had any doubt that the city will see a storm similar to last week's in the future.

Grego said he hoped Liberty Energy would be a part of the discussions with the city. But what the city can do beyond that may be limited, Grego said.

“I think the only thing we can do is wait and see how they

perform,” Grego said.


Santa Rosa Press Democrat - PG&E, state

PUC should heed plea from U.S. regulators

(EDITORIAL)

By Editorial Board. Jan 8

When a natural gas pipeline exploded in San Bruno on Sept. 9, we, along with many others, suspected it was further

evidence

of our

nation's

aging

infrastructure.

However, we withheld final judgment until the investigation of the cause of the explosion, which killed eight people and demolished 37 homes, could be completed.

Four months later, the verdict is in, and it's

worse than suspected.

Not only was

the

gas line rupture the result of

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infrastructure failure, PG&E didn't even have accurate

records about the type of pipes it was using underground.

PG&E's own engineering reports said that the San Bruno pipeline was seamless and had been built by

one

company.

Further

investigation

showed

that

the

steel

segment had

weak

longitudinal seams

and

that the

pipe had ruptured in a segment that had been seam-weided. Pius, not ail of the segments were made by the same company, according to federal officials.

Because of that, federal regulators this week sent an urgent message asking PG&E to make sure it is operating natural gas pipelines at safe pressures and, if uncertain, to consider scaling back on the pressure to 80 percent until the lines can be tested.

Given that most houses and business within Sonoma

County

receive

their

gas

and

electric

service

from PG&E,

locals should take notice.

The warnings came in two waves. On Monday, the National Transportation Safety Board called on PG&E to complete an “intensive record search” including possibly doing pipeline testing.

A day later, the federal Pipeline and Hazardous Materials Safety Administration issued a directive to all of the nation's gas line operators calling for “detailed threat and risk analyses” on the pipeline systems.

The

NTSB

lacks

the

authority

to

force

PG&E

to

take

action. But the California Public Utilities Commission does have such authority — and should use it. In fact, these urgent recommendations by federal regulators should be as embarrassing to the CPUC as it is to PG&E. It raises the question, why wasn't the CPUC ensuring that PG&E maintains proper records while at the same ensuring pressure is at safe levels?

Maintaining infrastructure — let alone maintaining records of infrastructure — is not sexy business. Few citizens

are likely to step up at a CPUC meeting or a PG&E shareholder meeting demanding proper

attention

to

and

funding

for

maintaining

infrastructure,

particularly in a time of austerity.

Nevertheless, the dangers of backing off on such upkeep are now clear and quantifiable: Eight lives lost. Thirty-seven homes demolished.

If PG&E hopes to show its customers it's committed to safety and not taking shortcuts, it will follow the

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recommendations of

federal regulators quickly. The

state PUC should do the same.


Marin Independent Journal - PG&E should

give

customers

a

choice

on

SmartMeters

(EDITORIAL)

By Editorial Board. Jan 9

IF PACIFIC GAS and Electric Co. really cared about good public relations, it would give its customers the option of having SmartMeters installed.

Right now, PG&E is trying to bully its way through a P.R. disaster in Marin — when it needs to repair a few old ones.

On Tuesday, the Marin Board of Supervisors voted for a one-year emergency ban on the installation of the electronic meters that replace mechanical devices that had to be manually checked by meter readers. The wireless meters allow PG&E and its customers to monitor power consumption far more closely, which has many

advantages. The new meters also mean PG&E doesn't have to pay meter readers to visit every house and business that has a meter.

SmartMeters were launched, with the state Public Utilities Commission's blessing, as a "green" measure,

an

easy

way

for

ratepayers

to

keep

track

of their

own power usage as a way to reduce consumption — and

potentially their power costs.

What PG&E and the PUC didn't expect was opposition

to the meters over worries that the wireless devices could pose health risks. That opposition has been especially strong in pockets

of Marin.

A number of Inverness residents made news when they created a blockade in an effort to stop workers from

getting into town to install the meters. Some even were arrested.

That display of civil disobedience was not the right approach. Protesters, while preventing PG&E from having meters installed at their homes, also were preventing the utility from changing meters on other residents' homes, some of whom might want the new devices.

PG&E maintains that SmartMeters create less

SB GT&S 001


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exposure to electromagnetic frequencies than regular use of a cellphone or a microwave oven. It could be right.

But the utility giant has a major public-trust problem, much of which is its own doing, including arrogantly

spending

tens

of

millions

in

last

year's

failed

effort

to

get state voters

to

approve

Proposition

16.

And

it

will be dealing with fallout from the pipeline explosion in San Bruno that killed eight people for years.

Assemblyman Jared Huffman has introduced legislation to halt SmartMeter installation until the California Council of Science and Technology can collect

information, analyze it and issue findings about the devices.

Local jurisdictions may not be able to ban the installation

of SmartMeters. PG&E gets its marching

orders

from

the

PUC.

But

there

is

enough

concern

that PG&E,

rather than forcing SmartMeters onto its customers, should give its ratepayers a choice.

That choice may come with a price if PG&E needs to

pay meter readers to go to homes where customers want to keep their mechanical meters. That's a choice each customers would have to make, but it's a choice PG&E would be wise to offer. PG&E would be wise to remember these are customers who are unhappy.

The reality is that most likely will be OK with their

SmartMeters.

Part

of PG&E's job is responding to storms and fixing

damage. The company didn't see this storm coming. Giving ratepayers a

choice is — at this stage — an overdue repair.


TELECOM - California

LA

Times

-

What's

to

blame

for

AT&T

outages? (COLUMN)

Recent storms caused many AT&T customers in California to lose phone, TV and Internet service, with about 70,000 still affected.

By David Lazarus. Jan 6

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Steve Robin works out of his La Crescenta home as a real estate investor and property manager. He relies on

AT&T for his phone line, fax line, broadband Internet

connection and TV service.

So it wasn't a very ho-ho-ho moment when Robin, 50,

became

one

of

thousands

of

AT&T

customers

statewide who

lost service

Christmas

Day

as

a

series of powerful storms clobbered California.

His frustration grew as the days passed and the only thing AT&T service reps could tell him was that technicians were on the case. It wasn't until Monday night — 10 days after the outage began — that Robin's service

was finally restored.

And he can consider himself lucky. As of this week, AT&T said it still had about 70,000 "trouble tickets" to address throughout the state and particularly in

Southern

California.

That's

about

10

times

the

usual number

of customers reporting that their service is on the fritz.

Verizon also experienced extensive

outages, although the company declined to specify how many customers were

affected. Time

Warner

Cable said its service was

disrupted in many SoCal neighborhoods.

The problems highlight the vulnerability of the telecom network — and what technicians say is a shortage of available manpower when

service

goes

down. Recent cutbacks by telecom companies have thinned the

ranks

of skilled

workers

capable

of responding

to

an emergency.

It's unreasonable

to

expect phone and cable

companies to keep work crews around on a just-in

case basis. The trick is finding the correct staffing balance that allows the greatest flexibility.

The storm-related loss of phone, TV and Internet service illustrates how

reliant we've come to be

on

these

technologies, and how isolated (not to mention unproductive) we become when they're

taken away.

"I

was

dead

in

the

water,"

Robin

said.

"To

keep

working, I

had to take my laptop to Starbucks, make business

calls on my cellphone, go to other people's homes. I had to do whatever I could to stay connected."

I know the feeling. Our home also lost Internet access for a week and it was like having the umbilical cord severed.

Suddenly all that life-sustaining data was

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gone.

On the plus side, it was a holiday week and neither my wife nor I needed to be online. And our family was able to play some cutthroat games of Clue (isn't it always Col.

Mustard committing the foul deed?).

But it's a drag being without a service that we pay handsomely for and that we expect to be provided with a modicum of stability. Isn't that what ail those rate increases are about — keeping the network up to snuff?

You never realize how much you've come to depend on having ail

of cyberspace piped into your home until the

line suddenly goes dark.

John

Britton, an AT&T spokesman, said he was as

surprised as anyone by the scope of the recent

outages.

"We've seen the most water damage to the network in more

than 10 years," he said.

Britton said hundreds of extra technicians have been

rushed to the Southland from Northern California and other states to

help get the

system up

and running again. He said AT&T hopes to have everything fixed by early February.

"We're putting maximum resources into dealing with this," Britton said.

A pair of AT&T technicians, who asked that their names

be withheld out of concern that it could cost them their

jobs, told me in separate interviews that this is indeed the

case — the company is putting on a full- court press

to

deal with the situation. They said they

and their cohorts are working mandatory seven-day weeks

and 12-hour days.

But

the technicians said the outages didn't need to be

this bad.

"The

company

hasn't

kept

up

with

maintenance

and upgrades for the

network," one

said.

"That's why

the problems are so widespread."

The technicians said cables and phone lines wouldn't have been so

waterlogged

if their casing and insulation had been

inspected and repaired at more regular intervals. Both cited hungry squirrels chewing on lines as

a key reason water gets in.

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They also said flooding of underground vaults and

pipes wouldn't have caused so much damage if the facilities had been regularly maintained.

The technicians said the network would be better

maintained,

and

repairs

would

be

faster,

if

AT&T

hadn't lost so many workers in cutbacks. About 525 California

technicians left the company or were reassigned last March.

Britton disputed that AT&T was unprepared for the storm damage.

"This is an emergency situation," he said. "We're not the only ones affected. They even had to close down the freeway because of the weather."

He said the number of technicians has declined in

tandem

with

declines

in

the

number

of

wire-line

phone

customers (as opposed to wireless customers). "We staff for the amount of work we have,” Britton said.

"This network operates virtually flawlessly 99.999% of the time,” he added. "When it doesn't, we're out there maintaining it."

Be that as it may, it's clear that our telecom

infrastructure is more fragile than most people realize.

In this age of multimedia, digital, high-speed, hold-on- to-your-hat content consumption,

any outage can be disastrous for people and businesses.

It's great to get off the grid now and then and chase down mean old Col. Mustard. But that should be at your own choosing, not because you've been knocked offline for weeks.

I'm not telling

AT&T how to run its business. But for a

company that pocketed $12.3 billion in profit in the third quarter of 2010 aione, maybe it wouldn't hurt to have a few more techs on hand.

Just in case.


TRANSPORTATION

- California

San

Mateo

Daily Journal - High-speed rail

SB GT&S 001


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head ditches Caltrain

By Bill Silverfarb, Jan 7

Bob

Doty, a man brought in to help save Caltrain from

financial ruin by partnering with the California High

Speed

Rail

Authority,

is

moving

to

the

private

sector

after heading the Peninsula Rail Program for two years.

Doty will take a senior executive position with HNTB, an engineering firm contracted to design the Peninsula segment of the high-speed rail project. He will first work on a high-speed rail program in Florida, however. Doty worked for and answered to both Caltrain and the rail authority and by agreement will do no work on the Peninsula section of the rail corridor for the next year.

The move forces Caltrain to reconsider how it will

move

forward

with

high-speed

rail

because

Doty

was

hired to “save” Caltrain, Executive Director Mike Scanlon wrote in a statement.

“His departure means we will rethink the structure and the personnel to go forward with high-speed rail,” Scanlon wrote in the statement. “We entered into the agreement with

High-Speed Rail to help save Caltrain. We still have to save Caltrain.”

Doty headed the working groups for city staff and officials

related to the alternatives analysis document released in August and presented designs that showed

mostly

an

aerial

viaduct

solution

for

the

tracks

on

the

Peninsula,

not the most popular choice for many cities.

He also rolled out Context Sensitive Solutions, a tool that was meant to bridge the gap between members of rival communities who may have different opinions on how the tracks should be configured.

Not everyone was impressed with his work, however.

Belmont

Mayor

Coralin Feierbach said she is glad he

is leaving.

“It might help that he’s leaving,” Feierbach said. “He was inflexible.”

Belmont opposes an aerial solution for a high-speed rail and would prefer to have the tracks buried through town as

does Burlingame.

Although

Doty presented solutions for high-speed rail

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that were not favored by many cities,

Burlingame Mayor Terry Nagei did appreciate his straightforward approach.

“He will be hard to replace,” Nagel said. “He gave direct

answers early on.”

High-speed rail problems start with an inadequate business plan and faulty ridership projections, Nagel said.

Nagei

hopes the environmental review process will

slow down or restart to include some of the alternatives

the

cities

preferred, such as tunneling or cut-and- covered trenches.

Doty’s last day as director of the Peninsula Rail Program

will be Jan. 21. His new position at HNTB will be vice president and director of high-speed rail

programs.

By agreement with Caltrain and the rail authority, Doty will do no work on the Peninsula section for a year.

“We

created

the PRP to take

full advantage

of

Bob Doty and his unique experience and expertise across the globe in designing and delivering large-scale rail projects. It is no surprise that a man of Bob’s talents and expertise is being snatched up by one of the firms that wants to be a player in the domestic high-speed rail competition,” Scanlon wrote in a statement.

Scanlon

said

Caltrain

entered

into

the

agreement

with

the rail authority to help save the commuter rail

service, which has no dedicated stream of funding.

The transit agency’s overall fiscal year 2010-11 budget, approved in July, is about $100.9 million but is projected to drop by $30 million in the next budget cycle as

contributions from SamTrans, Santa Clara County’s Valley Transportation Agency and the San Francisco Municipal Transportation Agency are expected

to be slashed by half next year.

Doty

would

not

discuss

the

details

of

the

compensation

associated

with

his

new

position

in

the

private

sector,

except to say it is expected to be “substantially more” than the $178,000 per year he was paid as director of the Peninsula Rail Program, according to Caltrain.

HNTB is an engineering and design firm that is under contract to provide

consulting expertise to high-speed rail projects

throughout the United States.

In California, it is designing the Peninsula segment of the California

SB GT&S 001


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High-Speed Rail project.


Fresno

Bee - Path of high-speed rail worries

Valley farmers

By Tim Sheehan. Jan 9

California's ambitious plan for high-speed trains is drawing sharp criticism from San Joaquin Valley farmers who fear the project

would carve

their

property into

useless pieces, disrupt their work

and

drive

down land values.

Others accuse the California High-Speed Rail Authority - the agency tasked with building the 800-mile system over the next decade - of ignoring their concerns and steering the proposed

rail line into the countryside as the

path

of

least

resistance.

"I have been able to deal with immigration officials, the United

Farm Workers union and Congress," said Manuel Cunha, president of the Fresno-based Nisei Farmers League. "But these guys [at the rail authority] don't want to talk with us. Their attitude is, 'We are going

to put this

through and we don't really care about these

farmers. I I!

Not so, said Jeff Barker, the authority's deputy

executive director.

"Agriculture is absolutely being listened to, and it will factor into the decisions we're making," Barker said. "You can't build a piece of infrastructure like this without affecting agricultural land, and we want to work with agriculture to mitigate those effects."

If the project is built as planned, about 170 miles of

dedicated high-speed tracks would carry passengers

between Merced and Bakersfield at speeds of up to 220 mph

across

some of the world's most fertile farmland.

That

worries

not

only

farmers

whose

land

is

likely

in

the path of the

tracks,

but

also growers

who have property on either side of the route.

"I'm a family farmer, and I want to stay a family farmer," said Brad Johns, a tomato farmer north of Hanford

who fears the rail line would slice through his

farmland "and right through the front door of my house.”

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"But I am

acquiescing to reality,"

Johns said. "This [train] is coming ... and I just have to learn to live with a new neighbor."

Beyond lost acreage

Between Fresno and Bakersfield - where the first $5.5 billion section of tracks is supposed to be built starting in 2012 - one primary route is being considered by the rail authority. It generally runs alongside the Burlington Northern Santa Fe railroad tracks. Exceptions include a

sweeping arc to take the tracks east of Hanford and

several

options

to bypass

Corcoran,

Allensworth, Wasco

and Shatter.

Two route options are being evaluated between Fresno and Merced. One parallels the Union Pacific railroad tracks and through the cities of Chowchilla and

Madera

along

Highway

99,

while

the

other

tends

to

run

alongside

the Burlington Northern Santa Fe

tracks

a

few miles to the east.

Depending on the route that's ultimately set between Merced and Bakersfield, the rail line may displace about 1,900 acres of property, according to the rail authority. Of that acreage, about 1,460 acres is farmland

-

about 2 one-hundredths of a percent of the more than 7.5 million acres of agricultural land in Merced,

Madera, Fresno, Kings, Tulare and Kern counties.

But

farmers

say

the

effects

would

be

out

of

proportion

to the acreage affected.

Johns owns

320 acres, some

of which has been in his

family for more than 60 years. He estimates he would lose about three acres if the tracks go where he believes they will. He's not happy about it.

"This was never part of my game plan," he said. "But I'm not going to take these lemons and make lemonade. I'm going to make margaritas."

Johns

said

he'll

negotiate

with

the

authority

for

the

best

possible

deal

to

compensate

for

lost

land

and

possible

loss of his home.

Johns

said coming through farmland naturally makes

more sense for rail planners than disrupting businesses and industries in cities.


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LA Times - Expo Line bidders under new

scrutiny in

fraud and construction problems

Probe comes after an initial review disclosed federal

investigations, alleged evasion of hiring requirements

and

other

problems.

By Dan Weikel, Jan 8

Builders of the Expo light-rail line in Los Angeles on

Thursday sought to reevaluate two bidders on the project

after an initial review uncovered a trail of federal investigations, allegations of fraud, past construction problems and payouts of millions of dollars in damages.

The Exposition Metro Line Construction Authority ordered a more in-depth performance analysis of the Skanska/Rados

and

the

URS/Shimmick joint

ventures

— two prospective finalists competing for a contract to build

the $1.5-billion second phase of the light-rail system from Culver City to Santa Monica.

"This is important and indicative of a new level of awareness by the board that we should be proactive," said Los Angeles County Supervisor Mark Ridley- Thomas,

who is a member of the Expo board and requested

the initial review of the two

bidders.

The inspector general's office of the Los Angeles

County

Metropolitan

Transportation

Authority

will

handle

the

more

detailed

analysis,

which

includes contacting

previous clients to assess each company's performance and responsibility on other construction projects.

Ridley-Thomas requested the first evaluation by the inspector

general in early December after reading a news account of a federal investigation in New York that targeted Skanska USA Civil Northwest, a subsidiary

of Skanska USA.

Authorities are looking into whether the subsidiary

used

front

companies

to

evade

requirements

that

it hire

a

certain

number

of subcontractors owned

by women,

minorities or businesses that have been officially

designated as disadvantaged.

Skanska USA, a major construction company, also is the parent company of Skanska USA Civil West, which is interested in participating in the Expo project. Its partner in the joint venture is Steve P. Rados Inc.,

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based in Santa

Ana.

The inspector general's initial review did not find anything questionable about Rados' past performance on contracts, but it discovered four other matters related to Skanska operations, including the New York

investigation.

The others involve the construction of a water filtration plant that more than doubled in price from $1.3 billion to

$2.8 billion, the death of a worker for a subcontractor that resulted in occupational health and safety charges, and news accounts indicating that Skanska contributed to a secret blacklist that targeted union officials in the United Kingdom.

Skanska

executives could not

be reached for comment,

but Steve S. Rados, co-president of Rados Inc., defended Skanska USA Civil West as a "first-rate

outfit"

that

he

had

no

reason

to

doubt.

He

added

that he has no problem with the new performance review.

Among other things, the inspector general found that URS

Corp. agreed to

pay $5 million in

damages to the state of Minnesota and $52 million to the victims of the Interstate

35 bridge collapse in Minneapolis three year ago. The report stated that the company was hired to analyze

the integrity of the bridge and failed to discover structural defects.

In addition,

URS has been sued by the Massachusetts attorney general's office, which alleges that the

company

defrauded

the

Massachusetts

Port

Authority. The report also stated that a URS-owned company

caused

uncontrolled radiation contamination at a nuclear

facility and that a URS subsidiary agreed to pay

the U.S. Air Force $1.7 million to resolve allegations of overbilling.

Jamie Tully, a spokesman for URS, said company

representatives could not comment because they have not seen the inspector general's findings. Tully defended the

firm, saying it is "one of the country's leading providers of engineering design and construction services for iight-rail projects."

According to the inspector general, URS' partner in the joint venture, Shimmick Construction, based in Oakland, was involved in a dispute with Bay Area Rapid Transit over whether a pedestrian bridge was improperly welded. A Shimmick spokesman said the issue has been resolved without a finding of fault on the part of the company.

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WATER

- California

Monterey Herald -

Battle

brews

over

water

fee

District contends the money vital to budget and without

it

layoffs likely

By Jim Johnson. Jan 10

Local water officials

are scrambling after a long-

running fee that pays for a wide range of Carmel River mitigation and

water

management efforts was rejected by a state Public Utilities Commission judge last month.

They're contacting state water officials and urging the public

to back the fee, which is collected by California American Water

on its water bills

for the Monterey Peninsula Water Management District's

Carmel River mitigation program. The 8.325-percent fee collects millions

of dollars per year

for the program, which

is

designed to offset the impacts of public use of the river water source. Local officials are arguing that it is essential to continue the legally required river mitigation work in its current form.

A water district official said the fee, which had been

collected

for

the

district

since

the

1990s

until

it

was halted in mid-2009, also represents a significant

portion of the district's budget and the loss of revenue could

result in nearly a dozen layoffs.

On Dec. 21, Administrative Law Judge Maribeth Bushey issued a proposed decision finding the fee was not justified, largely because of concerns about the potential size of the fee and the scope of work it pays for,

and should be discontinued.

The commission must decide whether to adopt

Bushey's proposed decision, and could consider it as

early

as

its

Jan.

27

meeting,

but

is

more

likely

to

wait

until its Feb. 24 meeting.

State and local water officials have until today to respond to the proposed decision, and reply comments are due within a week.

The public can also submit comments through the CPUC.

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Water

Management District general manager

Darby Fuerst said officials from the district, Cai Am and the CPUC's Division of Ratepayer Advocates, which signed

an agreement backing the fee, have already met with an advisor to commission President Michael

Peevey.

Fuerst

said

the

advisor

indicated

Peevey

would

consider developing

an

alternate

proposed decision,

and discuss with Bushey the possibility of a revised proposed

decision.

"We think the proposed decision is flawed, both legally and factually," Fuerst said. "We're asking that the (fee) be approved again."

District wants to continue

Cal Am spokeswoman Catherine Bowie said the water district has met its responsibilities under the program

and

the

company

wants

it

to

continue

to

do

so.

Bowie

noted

that the proposed

decision comes on the heels

of commission approval of a regional water project designed to offset the effects of pumping from the river source.

"We

support the district and feel

the fee

should continue to

be paid to them," Bowie said. "With all their years

of experience, we think they're the best to continue this important

work. We also believe that

when

we're

so close

to a water solution

it doesn't make sense to

change course.”

Bowie

pointed

out

that

the

river

mitigation

work

is

required and Cal Am would simply have to find another way to make sure it's done, perhaps by finding another agency to do the work, and customers would still ultimately pay for

it.

"This is part of running the water system," Bowie said.

"The expense will still be there.”

Supervisor Dave Potter, a member of the water district board, said the question is who else could undertake the

mitigation work and how much of it is actually

mandated.

Fuerst said Cal Am

has indicated it wants to continue working with the water district on the mitigation program and is obligated to continue funding it until a final

decision by the commission. But he said Cal Am

officials have already indicated they will send the district an intent to terminate its agreement with the district,

which would take effect within 90 days. And the district board has directed staff to suspend all major

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spending for the next

three months.

If Cal Am terminates and renegotiates with the district, Fuerst said he

believes

the company will seek to re evaluate the original intent of the river mitigation measures

required by

the state, and some district

projects

could

be

eliminated or

cut

back.

At the CPUC, the proposed fee was split off by the commission from a larger Cal Am general rate increase bid for 2008-10 after Bushey raised a number of issues with the method and purpose of the monthly charge, including the potential increase in the fee as overall bills rise, the apparent absence of a link between rising fee revenue and required mitigation work, and possible duplication of accounting and effort.

Monitoring the usage

In

addition

to

mitigation

work

on

the

river's

steelhead

and habitat, riparian vegetation and

wildlife, and lagoon vegetation and

wildlife, the district's program

includes water supply and usage monitoring, water production and demand management, and water supply

augmentation. The district also spent nearly $1

million

to help pay for its headquarters.

Following the commission's decision in the summer of 2009,

Cal

Am

stopped

collecting the fees but began an

account to keep

a

record of how much the fees would

equal, and

continued paying that amount — about $4.1 million — to the water district for the mitigation

work.

State

water

officials

require

Cal

Am

to

continue paying for the mitigation work if the water district can't

or won't.

Cal

Am

submitted an application for the fee last January, and submitted a joint motion in May to approve a settlement agreement with the water district and the DRA.

In its application, Cal Am argued the fee was justified because its expenditure by the district occurs only after a "transparent public process," the district is prohibited by state law from collecting more than it spends, and

the

district's

own

rules

allow

it

to

fund

any

endeavor that confers "benefit and/or service" to Cal Am's customers. It also argued that the commission lacked the authority to scrutinize the proposed charge in detail because of its status as a local government fee.

But

in her

proposed

decision, Bushey criticized the

fee proposal because it was not based on the costs of the district's programs, and included "no ratemaking or

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programmatic

limitations,"

and provided no justification for a potentially large increase in the size of the fee. She

also

expressed

concern about the lack of

incentive for Cai Am to control costs if the commission

"blindly" allows

the

bill

for

mitigation

work to be passed

along to customers.

In

addition,

Bushey

recommended the

memorandum account be dissolved and not recovered from ratepayers "in any way."

Bushey suggested that Cal Am could justify a "forwardlooking

rate mechanism" and the needed funding f

Documents

CPUC and PG&E Emails: "You and I can triangulate"